Working Papers
Do Larger Firms Exert More Market Power? Markups and Markdowns along the Size Distribution, with Matthias Mertens. CEP Discussion Paper No. 1945.
Several models posit a positive cross-sectional correlation between markups and firm size, which characterizes misallocation, factor shares, and gains from trade. Accounting for labor market power in markup estimation, we find instead that larger firms have lower product markups but higher wage markdowns. The negative markup-size correlation turns positive when conditioning on markdowns, suggesting interactions between product and labor market power. Our findings are robust to common criticism (e.g., price bias, non-neutral technology) and hold across 19 European countries. We discuss possible mechanisms and resulting implications, highlighting the importance of studying input and output market power in a unified framework.
Living with Lower Productivity Growth: Impact on Exports, with Filippo di Mauro, Gianmarco Ottaviano and Alessandro Zona-Mattioli. PIIE Working Papers 8-10.
Productivity growth has slowed in most Western countries, and the slowdown is likely to persist for some time. This paper investigates the impact of this phenomenon on export performance, with a particular focus on its heterogeneity across countries. To explain such heterogeneity, the authors pay particular attention to the role of productivity distribution and allocative efficiency. They rely on data from the Competitiveness Research Network (CompNet), a unique micro-aggregated database that provides a rich set of information on the variables’ distribution at the granular level, together with micro-founded indicators such as the level of allocative efficiency. They argue that increases in both productivity dispersion and allocative efficiency, measured with the methodology of G. Steven Olley and Ariel Pakes, are associated with higher export competitiveness for the set of countries in this analysis. They evaluate four separate scenarios according to different levels of productivity growth and different degrees of allocative efficiency and conclude that, while a reduction in productivity growth is always associated with a decrease in export competitiveness, for those countries placed in the top 10 percent of the distribution of the Olley and Pakes gap, this negative effect can be offset for as long as eight years.
Works in Progress
Work from Home and Monopsony Power, with Tito Boeri, Peter Lambert, and Paolo Naticchioni.
Quality, Quantity, and Price: Measuring Productivity from Revenue Data.
The Allocative Inefficiency of Bank Credit: Evidence from European Firms.